6 Top Robinhood Stocks for Late 2020: Do the Pros Agree?
The success of some Robinhood traders has piqued investors' curiosity. But what do the pros have to say about the platform's top stocks as 2020 winds down?
The zero-commission trading app Robinhood, which has become popular with millennials, has emerged as a pandemic success story in 2020. And thanks to the well-documented success of young traders on the platform this year, many investors have taken in to monitoring the top Robinhood stocks at any given time.
The platform's key selling point is that users can make unlimited free trades, making the stock market accessible to those who had been previously sidelined by high prices. Thanks to that, and its ease of use, Robinhood has attracted a swath of youthful investors.
It also has attracted its fair share of critics – some argue that Robinhood "gamifies" investing through the use of regular push notifications. Additionally, Robinhood provides access to risky investments like options, and in some cases, users have noted that they didn't fully understand what they were getting into. This year's suicide of a young trader from Illinois highlighted the dangers of providing access to sophisticated investment methods with little vetting.
Robinhood investors have nonetheless piqued the curiosity of the broader community. And it's easy to satisfy one's curiosity about their investing habits: Robinhood itself lists the app's most popular picks at any given time, including how many accounts are invested in each.
Bearing this in mind, our attention shifted to Robinhood's list of the 100 Most Popular Stocks. Using TipRanks' database, we wanted to find out if the analysts agree. Here is the lowdown on its six most popular picks.
Data and Robinhood popularity stats are as of Nov. 23.
Aphria
- Market value: $1.8 billion
- Popularity rank: #6
- TipRanks consensus price target: $7.91 (24% upside potential)
- TipRanks consensus rating: Strong Buy
Powered by sunlight, marijuana stock Aphria (APHA, $6.36) is a producer of cannabis products. Following a recent acquisition, several analysts have taken a bullish stance.
Aphria, which has an approved capacity of 255,000 kilograms per year, announced in early November that it has inked a cash-and-stock deal to snap up SweetWater Brewing Company for $300 million, as well as up to $66 million in additional cash earnouts up to 2023. SweetWater's distribution spans 27 states plus Washington, D.C., with beverages sold at about 29,000 retail locations and more than 10,000 restaurants and bars.
According to Aphria, the deal will be accretive immediately, with management adding that SweetWater's brands complement its own products. The goal of the acquisition is to generate significant cross-selling and market expansion opportunities.
Weighing in for Haywood, analyst Neal Gilmer estimates that the deal, which could be finalized by the end of 2020, represents a 12.5x EBITDA (earnings before interest, taxes, depreciation and amortization) multiple for Aphria, with the two companies boasting annualized pro forma revenue of between C$650 million to C$675 million and adjusted EBITDA of between C$65 million to C$70 million on a combined basis.
"Aphria is acquiring robust infrastructure that is scalable and would substantially accelerate entry into the U.S. cannabis market, subject to federal legalization. ... We view this transaction positively for the diversification and brand awareness opportunity ahead of a potential legalization in the U.S.," Gilmer (Buy) wrote in a note.
All other analysts who have weighed in over the past three months agree, with six Buy ratings during that time span. For more information, check out the APHA analyst consensus and price target page on TipRanks.
Sony
- Market value: $110.8 billion
- Popularity rank: #5
- TipRanks consensus price target: $100.00 (11% upside potential)
- TipRanks consensus rating: Strong Buy
Wall Street's focus has landed on Japanese electronics conglomerate Sony (SNE, $89.79) as it releases its PlayStation 5 gaming consoles for the 2020 holiday season.
Investors have expressed concern that Microsoft's (MSFT) new online subscription gaming service, Xbox Game Pass, will give it an edge over SNE in the battle of the game consoles. However, Jeffries' Atul Goyal believes that Sony's long-term growth narrative remains strong.
"Our discussions with Sony executives left us more confident about Sony's prospects over the next two-five years," says Goyal, who rates the stock at Buy. "As a result, we raise our (operating profit) estimates for the three most important segments: Games, Image-sensors, and Music. Most of Sony's businesses are clear beneficiaries of an opening up.
"Meanwhile, the start of a new console cycle and higher profits should offset downside from a reopening."
Goyal also raised his 12-month price target a smidgen, from $126.69 per share to $129.66, implying 44% upside potential from here. While the rest of Wall Street isn't as enthusiastic, they're still broadly bullish, with two other Buys versus one Hold and an average $100 price target. Check out other analyst ratings and targets on TipRanks.
Amazon.com
- Market value: $1.6 trillion
- Popularity rank: #4
- TipRanks consensus price target: $3,818.46 (23% upside potential)
- TipRanks consensus rating: Strong Buy
Jeff Bezos' Amazon.com (AMZN, $3,098.39) takes the No. 4 spot on Robinhood's list. The Wall Street heavyweight has benefited from the stay-at-home climate, and thus, like Alibaba, it might experience some near-term challenges. However, some members of the Street believe shifts in consumer shopping and enterprise computing trends will continue to propel it forward in the long run.
In the third quarter, Amazon beat expectations for revenues and profits alike. However, its Q4 guidance landed slightly below expectations, resulting in some share price weakness. That said, Tigress Financial analyst Ivan Feinseth (Buy) argues that "AMZN's ongoing success of its Prime Day highlights its strong sales momentum and indicates a very strong holiday season."
On top of this, the company continues to enhance its human interface capabilities, with the analyst citing the launch of Amazon One – a fast, convenient and contactless way to use the palm of your hand for payments and verifiable admission. What's more, "AMZN's strong underlying technological advantage, including its AWS (Amazon Web Services) platform and Alexa smart speakers, will continue to drive growth," Feinseth says.
"(Amazon's) industry-leading positions in critical areas, along with its innovative ability, will further drive increasing Economic Profit that will continue to drive greater shareholder value creation. We believe significant upside exists from current levels and continue to recommend purchase."
The rest of the Street currently has a Strong Buy analyst consensus on AMZN, based on 36 Buys and just one Hold. Discover what the rest of the Street has to say about Amazon.
Alibaba
- Market value: $730.8 billion
- Popularity rank: #3
- TipRanks consensus price target: $338.47 (25% upside potential)
- TipRanks consensus rating: Strong Buy
Chinese e-commerce and computing giant Alibaba (BABA, $270.11) has attracted unanimously bullish attention from Wall Street recently, despite the fact that optimism surrounding a possible COVID-19 vaccine has pushed shares lower in recent days as investors shift away from the pandemic beneficiaries. Specifically, 24 analysts that have sounded off on BABA over the past three months say the stock is a Buy, with no dissenters.
Among the Alibaba fans is Needham analyst Vincent Yu, who points out that in the most recent quarter, gross merchandise value (GMV) growth rates exceeded the industry growth rate, implying market share gains.
"We highlight the 'high-teens' in Taobao physical GMV growth, which, coupled with 21%-plus year-over-year Tmall GMV growth, likely pushed Alibaba's overall GMV growth faster than the national online physical goods growth rate of 17%-plus, indicating that Alibaba took market share in Q1 2021," Yu says. "Specifically, similar to Q1 2021, categories such as FMCG, healthcare, in which Alibaba was not a leader, continued their growth."
Adding to the good news, the analyst sees key growth catalysts, given that Taobao Deals added more than 30 million monthly active users (MAUs) during the quarter, bringing the total MAUs to 70 million.
"We think monetization opportunities based on the upgraded Taobao recommendation feed will likely be a short to mid-term catalyst for revenue growth, as it allows Taobao to access brand ads, which are ~30% of the total ads wallet share," adds Yu.
Yu, who has a Buy rating and $330 price target, also likes that BABA ramped up the on-boarding of government clients, as the public sector cloud market represents a significant market opportunity. See other BABA analyst ratings on TipRanks.
Catalyst Pharmaceuticals
- Market value: $356.5 million
- Popularity rank: #2
- TipRanks consensus price target: $7.25 (111% upside potential)
- TipRanks consensus rating: Moderate Buy
Focused on developing innovative therapies, Catalyst Pharmaceuticals (CPRX, $3.44) wants to improve the lives of patients battling rare diseases. Although COVID-19 has weighed on the healthcare company, some analysts say this is only a temporary headwind.
H.C. Wainwright analyst Andrew Fein points out that the pandemic "continues to have a direct impact on the freedom of adult Lambert-Eaton myasthenic syndrome (LEMS) patients not only: (1) to pursue definitive diagnosis from their physician; but also (2) with regard to the flexibility and comfort level for in-person care."
However, despite the challenging environment, net product revenue for Firdapse, its treatment for Lambert-Eaton myasthenic syndrome (LEMS), came in at $29.2 million, compared to $30.9 million in the prior-year quarter – a stable result.
"While we would favor the observation of measurable revenue growth in this instance, we remind investors the Q3 2019 value is pre-pandemic, which we believe supports the commercial positioning of Firdapse remaining steadfast as the limitations of the pandemic continue to be navigated," Fein says. "Despite indication of modest new patient starts, we believe this trend could be shifting as positive momentum was discussed for September and October, with new patient enrollments for October noted to represent the highest rate since pre-pandemic July 2019."
Fein notes that CPRX has made significant progress internationally. This includes a license agreement with KYE Pharmaceuticals for Firdapse in the Canadian market and efforts related to partnerships in Japan.
"We ultimately view these efforts along with the ongoing pursuit of possible business development opportunities to broaden the pipeline as upside, while Firdapse continues its targeted influence in the treatment of adult LEMS patients," says Fein, who reiterated his Buy rating and $9 price target, implying 162% upside over the next 12 months.
CPRX has a Moderate Buy consensus, but that's simply due to a thin covering crowd. Just two analysts have weighed in on the stock over the past three months, but both – including Fein – were Buys. For more analyst insights on CPRX, take advantage of TipRanks.
Virgin Galactic
- Market value: $5.8 billion
- Popularity rank: #1
- TipRanks consensus price target: $25.00 (Marginal upside potential)
- TipRanks consensus rating: Strong Buy
Virgin Galactic (SPCE, $24.91) is the space tourism company created by Virgin Group founder Richard Branson, although it has yet to send any tourists to space. Nonetheless, Wall Street is excited by this company's prospects.
Cowen analyst Oliver Chen, who maintains an Outperform rating, tells clients that SPCE is in the last stages of test programs for technological feasibility. Success here could allow the company to kick off commercial operations, and thus jump-start revenue generation.
To this end, Chen believes FAA approvals as well as a test flight could come by the end of Q1 2021. He adds that Space Ship Two could commercially operate in the second half of 2022.
"We do believe spaceflights from Spaceport America, New Mexico scheduled for November and Q1 2021 will be stock catalysts as each drive greater visibility to long-term revenue generation capabilities," Chen says.
Virgin Galactic boasted $742 million in cash at the end of the third quarter, compared to $360 million at the end of Q2. Chen estimates FY21 and FY22 net cash burn will land at approximately $295 million and $330 million, respectively, with FY21 revenue of $12.4 million expected.
SPCE shares have received five Buys and one Hold over the past three months, translating into a Strong Buy analyst consensus. You can learn more about the analyst community's views on Virgin Galactic shares via TipRanks' consensus breakdown.
